When Statistics Lie: The Dwindling Numbers of Beneficiaries under the PM-Kisan Scheme

A small farmer in Karnataka spent Rs 25,000 cultivating, harvesting and transporting his onion crop to Bengaluru’s Yashwantpur market. After selling 205 kg of onion, and after deducting mandi and porter charges, he apparently earned a princely sum of Rs 8.36.

A photograph of the receipt he got went viral, but that still didn’t bring home to us the full wretched reality of this commonplace occurrence. This happens all the time, to tens of thousands of small farmers, routinely traumatised by the prices private traders offer for their produce at wholesale markets.

This has been the lot of small farmers for a long time: selling at prices that barely cover their cost of production. Those who venture out to the cities in the hope of getting higher prices often end up worse off as our farmer from Karnataka found out. Income support for farmers as a mitigating strategy came out of the realisation that the small farmer rarely gets fair prices, a fact that sits at the heart of agrarian distress.

Nevertheless, it was after a lot of deliberation, and despite mainline economists not being in its favour that in February 2019, the government launched the Pradhan Mantri Kisan Samman Nidhi scheme under which financial support of Rs 6,000 per year was announced to all land-owning farmers. Although, this direct income support package was not adequate, considering that each farmer’s entitlement was only Rs 500 per month, and to be paid in three instalments, several of us had still welcomed it and called it a tectonic shift in economic thinking—moving from price policy to income policy.

At a time when World Trade Organisation (WTO) was keeping a close watch on the public stockholding subsidies, which effectively meant Minimum Support Price (MSP) for farmers to be kept low and within limits, direct income support was needed justifiable. Moreover, it didn’t violate any of the WTO obligations and therefore could be one of the ways to meet the income shock that farmers often face.

Three years later, a shocking news report, based on a response to an RTI application, claims that the actual number of farmer beneficiaries under the PM-Kisan scheme has fallen by 67 per cent. Against the number of beneficiaries that stood at 11.84 crore in 2019, the number has drastically come down to 3.87 crore in May-June 2022, the RTI revealed.

While reasons behind the sharp downslide are still not known, this decline seems to negate the very purpose and intent for which the coping mechanism of direct income support was initiated. Considering that 86 per cent of the farming population comprises small and marginal farmers, with a landholding below 5 acres each, the role of direct income support in uplifting farm incomes is clearly very crucial.

Some 14-15 years back, when I had first called for direct income support to farmers as a necessary intervention to address livelihood insecurity of farmers, my intention was to draw attention to the missing link between food security and livelihood protection functions of public policies. What wasn’t being realised was that the livelihood shock arising from an unpredictable vulnerability of a collapse in prices for instance invariably leads to adverse consequences for farm families.

At several conferences on subjects focusing on farmer’s income security, several economists and officials had scoffed at my suggestion for direct income support to farmers, arguing that cash transfer was not workable in a market economy. Some had even pointedly told me that the idea of direct income support was a legacy of the socialist-era and was not acceptable.

Since then, my argument has remained the same: that farm prices are the outcome of an economic design that deliberately keeps agriculture impoverished so as to keep the economic reforms and the ‘liberal’ economic model viable. The economic design was cast in a manner, I have argued, that we have socialism for the corporate sector and capitalism for farmers. The entire burden or cost of economic reforms is borne by the farming community.

This becomes important given the fact that while the poor face greater livelihood threats, the state development policies have remained focused on increasing production, and not caring much for those who produce food.

In an interesting analysis to ascertain functionally vulnerable groups, the International Fund for Agricultural Development (IFAD) had done an exercise to look at the rural poor in 64 developing countries. It found smallholder farmers and landless constituted 93.5 per cent of the total vulnerable population. Even in this grouping, small landholder farmers alone formed the major category, with 64.3 per cent share of the lot.

Therefore, if the vulnerability of the small landholder farmers was to be addressed, as in India where roughly 50 per cent of the population is still dependent on agriculture, an effective coping mechanism was required to adequately address the income shocks. To meet the needs of larger farm population subsisting on inadequate incomes, the case for cash transfer as a social protection measure was certainly overwhelmingly strong.

Findings published in the Economic Survey in 2016 said the average income of farming families in 17 states of India — roughly half the country— stood at a paltry Rs. 20,000 a year. In other words, farm families in nearly half the country were surviving on less than Rs. 1,700 a month. This showed the extent of extreme vulnerability that existed among farming population.

Subsequently, another study by the Organisation for Economic Cooperation and Development (OECD), the richest trading block along with a New Delhi-based NGO, in a report published in 2018 claimed that Indian farmers lost Rs. 45 lakh crore in a span of 16 years, between the years 2000 and 2016.

Although, in my understanding this was an underestimation, given the price comparison with international prices which in any case remains usually subdued because of massive agricultural subsidies that the rich countries provide, the figure still provided an eye-opening exposure to the extent of losses farmers continue to suffer. Direct income support is one of the coping measures that can compensate farmers.

The sharp decline in the number of beneficiaries under PM-Kisan scheme shows that market forces are uncomfortable to the idea of direct income support. Although the reason behind the fall in the number of beneficiaries will be known in time, the need is to further strengthen PM-Kisan, with its scope extended to include tenant farmers as well.

Many believe that redistributive transfer programmes are fiscally unsustainable, but given the fact that 5.5 per cent of GDP goes as tax concessions to the corporate every year, I see no reason why PM-Kisan cannot be seen as a livelihood security programme to realise the dream of ‘Sabka Saath Sabka Vikas’.